Policy strengthening required to meet UK carbon budgets
A new report from the Committee on Climate Change (CCC) concludes that the UK’s carbon budgets can be met but only if the Government strengthens its key policies.
The CCC’s latest progress report to Parliament says that the first carbon budget has been met but partly as a consequence of the recession.
There has been strong progress in improving the fuel efficiency of new cars and the foundations have been laid for the electric vehicle market and for carbon capture and storage.
However, in other areas progress has been limited – notably in energy efficiency improvement in the commercial and industrial sectors and in the uptake of heat pumps.
The Committee argues that under the current rate of progress future budgets will not all be met. Current policies may only reduce emissions by 21% to 23% from 2013 to 2025, rather than the required 31% reduction.
On policy strengthening, the CCC makes recommendations as follows:
Residential energy efficiency. Progress insulating homes plummeted with the introduction of new policies in 2013 (the Green Deal and Energy Company Obligation). For example, over 600,000 cavity walls were insulated in 2012 but only 170,000 in 2013. The Energy Company Obligation (ECO) is now being redesigned to include more low-cost measures and new financial incentives are being introduced for the Green Deal. This is welcome, but ambition remains low and should be increased.
Renewable heat. Increasing uptake of low-carbon heat is a priority. Despite the fact that the current scheme to incentivise this – the Renewable Heat Incentive (RHI) – is very generous, take-up of heat pumps has been very low (e.g. only around 1% of spend to date in the non-domestic scheme). Rather than increase subsidy further, the Government should focus on tackling financial and non-financial barriers. This should include extending commitment and funding to the RHI beyond 2016, to reduce policy insecurity and encourage supply chain development, and allowing access to Green Deal finance for renewable heat installations.
Commercial sector. There is not much evidence of energy efficiency improvement in the commercial sector despite opportunities to do so. The policy landscape is complex and has mixed incentives. This situation should be simplified so that we lower administrative costs while, at the same time, improving delivery.
Power Sector. There has been progress on Electricity Market Reform, but there is a high degree of uncertainty about the support for low-carbon capacity beyond 2020. This undermines investment. It should be addressed by setting a carbon intensity target for 2030, together with funding to deliver this and strategies for commercialising offshore wind and CCS.
Electric Vehicles. While there have been some positive signals about the development of the electric vehicle market, the uptake of electric vehicles has been low. An ambitious EU target for new car emissions in 2030 would strengthen incentives for manufacturers to promote electric vehicles and develop innovative approaches to financing. This should be supported strongly by the Government. If put alongside further investment and development in charging infrastructure this could allow the current purchase subsidy to be phased out over time.